UPL (UPL) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 revenue was ₹9,067 crore, up 1% year-over-year, driven by a 16% volume increase despite a 14% price decline and 1% FX impact; management remains confident in achieving full-year EBITDA growth and debt reduction guidance.

• EBITDA declined 28% year-over-year to ₹1,145 crore, with margin at 12.6% versus 17.8% last year; net loss for the quarter was ₹965 crore, mainly due to lower EBITDA and negative EPS of ₹6.02.

• Contribution margins declined 620 bps year-over-year to 39.5% due to price pressure, higher freight, and high-cost inventory liquidation, but improved 470 bps sequentially from FY24.

• Strong volume recoveries were seen across all geographies, but pricing pressure persisted.

• Unaudited standalone and consolidated financial results for the quarter ended June 30, 2024, were approved by the Board and reviewed by the Audit Committee, with an unmodified review conclusion from statutory auditors.

Financial highlights

• Revenue growth was flat at 1% year-over-year, with strong 16% volume growth offset by a 14% price decline and 1% FX impact.

• Contribution margin fell to 39.5% (down 620 bps YoY), but improved 470 bps over FY24.

• EBITDA declined 28% year-over-year to ₹1,145 crore; EBITDA margin was 12.6% (down 520 bps YoY).

• Net loss for the quarter was ₹965 crore, compared to a net profit of ₹31 crore in Q1 FY24.

• Net debt stood at $3.3 billion as of June 2024, up $105 million year-over-year.

• Net working capital days remained flat, with lower inventory days offset by higher receivable days.

• Average cost of debt rose to 7.5% from 5.5%-6% last year.

Outlook and guidance

• Management maintains FY25 guidance of 4%-8% revenue growth and over 50% EBITDA growth versus FY24.

• Cash flow from operations expected at $300 million-$400 million, supporting deleveraging.

• Margins are expected to normalize and improve in H2 as high-cost inventory is liquidated and pricing stabilizes.

• Rights issue of up to ₹4,200 crore approved, expected to close by end of FY25, with promoters committed to full subscription.

• Transition to tighter credit and inventory norms in India may impact sales in the next two quarters.